Why are More Redistributive Social Security Systems Smaller? A Median Voter Approach

Marko Köthenbürger, Panu Poutvaara and Paola Profeta
Authors registered in the RePEc Author Service: Marko Koethenbuerger

No 1397, CESifo Working Paper Series from CESifo

Abstract: We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. Our key insight is that linking benefits to past earnings (less redistributiveness) reduces the efficiency cost of social security (due to endogenous labor supply). This encourages voters who benefit from social security to support higher contribution rates in political equilibrium. We test our theory with a numerical analysis of eight European countries. Our simple, but suggestive median voter model performs relatively well in explaining the stylized fact and cross-country differences in social security contribution rates.

Keywords: earnings-related and flat-rate benefits; social security; public pensions; median voter model (search for similar items in EconPapers)
JEL-codes: D72 H55 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-cdm, nep-dge, nep-pol and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Why are more redistributive social security systems smaller? A median voter approach (2008)
Working Paper: Why are more redistributive social security systems smaller? A median voter approach (2008)
Working Paper: Why Are More Redistributive Social Security Systems Smaller? A Median Voter Approach (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1397

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